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I Analyzed 10,000 TRADES (50 Strategies) – Here’s What … — Transcript

Data from 10,000 trades reveals that market conditions, not just strategies, determine trading success. Learn to identify good vs bad markets.

Key Takeaways

  • Market conditions are the primary factor affecting trading success, not the strategy itself.
  • Trend trading strategies generally work well in trending markets but fail in sideways or choppy markets.
  • Identifying and avoiding bad market conditions is crucial for profitability.
  • Beginner traders often quit because they misinterpret strategy failure instead of market condition impact.
  • High win rates advertised by gurus are often unrealistic; focus should be on market context and risk management.

Summary

  • Over 10,000 trades from 50 trend trading strategies were tested across multiple market conditions.
  • Strategies were scored on win rate, ease of use, reliability, consistency, and quality of trades.
  • In mostly good trending markets, 78% of strategies were profitable, only 13% lost money.
  • In extremely good trending markets, 87% of strategies made a profit, with only 12% losing money.
  • In extremely bad market conditions, 75% of strategies lost money, and only one strategy made a good profit.
  • Trend trading strategies succeed mainly because the market trend carries them, not due to special strategy features.
  • When markets are choppy or flat, trend strategies fail because the 'price train' stops moving.
  • Beginner traders often fail because they cannot distinguish good from bad market conditions and trade indiscriminately.
  • Experienced traders improve profits by avoiding trades in bad market conditions rather than changing strategies.
  • Win rate alone is misleading; many strategies have break-even or low win rates, especially in bad markets.

Full Transcript — Download SRT & Markdown

00:01
Speaker A
This is one of the most important trading videos you will ever watch because you will see tested data that shows whether you will become a profitable trader or not. Over the years, I have tested many different trading strategies 100 times on the Trading Rush channel. I didn't just test them in one market, but in multiple market conditions from good to bad. In total, we tested more than 10,000 trades. That is a lot of trades. But I have also given all tested strategies a trading score and rated them in different categories such as win rate, ease of use, reliability, consistency of profits, and quality of trades. All this helps us find the best trading strategy out there. But when I plotted this tested data using charts, I found something really important and interesting. It showed the reality of trading and what actually decides if you will make it in trading or not. So in this video, we will go through seven really important data points that will greatly impact your probability of becoming a successful trader according to data. If you have been trading for a while, there is a good chance you have tried many strategies and there is an even better chance that most of them did not work. So you ditched them, found new ones, and the cycle kept going. In our trading journey, we experienced that the majority of trading strategies don't work. Some of them give around a break-even win rate and only a tiny percentage actually make money. But here is what the data from over 10,000 trades actually shows. And it is going to change everything you knew about why strategies work. You see, on the Trading Rush channel, I tested strategies in mostly good, extremely good, and extremely bad market conditions. And almost all strategies were trend trading strategies. Here, the first chart shows what happened to strategies in the mostly good trending market. This is the market where the price is mostly trending with bigger pullbacks, but also has range choppiness in between. In this market condition, around 78% of strategies made a profit. Only 13% actually lost money and around 9% was sitting near the break-even point. This data proves something really important. Take any strategy you have ever used, the ones you deleted, the ones you gave up on, and the ones we all thought didn't work. If those strategies were trend trading strategies, there is a really high chance the strategy was working and making money all along. The strategy was never broken, but something else was the problem, which you will see in a moment. The second chart shows what happened to the strategies in extremely good market conditions. This is where the price was moving strongly in one direction and the range choppy markets were filtered out. Around 87% of strategies made a profit and only 12% lost money. This also includes strategies that didn't give enough trading opportunities. But even counting those as bad results, only 12% lost. Most of them made a really nice profit. But things get really interesting in the extremely bad market conditions. Around 75% of strategies lost money and 23% were around the break-even point. Only a single strategy out of everything managed to make a good profit. This is important to understand because it really shows what is actually happening. For example, imagine you are standing at a train station. When the train slows down and stops, some people get out of the train and some people get in. Then the train starts moving again, picks up speed, and before you know it, it is flying down the tracks. Now, at that point, it doesn't matter what is inside that train. Luggage, a bicycle, a confused tourist, or a broken umbrella. Everything inside is moving at full speed. Not because of any special ability, but simply because the train is carrying it forward. But now imagine that this station is the last stop on the route. The train slows down. Some people get out and some people get in. But this time, nothing happens. Everything and everyone who got on the train is now just sitting in a stationary train going absolutely nowhere. The 10,000 trades tested data is showing the same thing. A trending market is like a moving train. The price moves in one direction, then slows down a little at the train station where people get in and out, and then the price continues to move in the trend direction. Strategies work not because they are special, but because the trend is doing all the heavy lifting. When the price train comes to the last station and stops moving, becoming choppy, slow, ranging, or pretty much flat, most trend trading strategies in this market will simply lose money. They lose not because they don't work, but simply because the train itself has stopped moving. That is why the data shows most strategies winning in good trending markets and most strategies losing money in bad market conditions. But the thing is when we are beginner traders, we have no experience identifying the good and bad market conditions. Everything looks the same to us. Our trading experience looks something like the third chart where most trading strategies lose money and we think they simply don't work. This is also the point where many traders simply quit trading. But once we gain enough live trading experience to identify the good and bad markets, we learn to simply avoid trading when market conditions get bad. As a result, the profit graph starts moving in an upward direction overall. This is when we start finding strategies that actually work. But it was all an illusion. All these strategies always used to work. It just didn't work before because we lacked enough experience to filter out the bad market conditions. So, the data from more than 10,000 tested trades says that if you really want to become profitable in trading, don't focus on the strategies. Focus on identifying the good and bad market conditions first because those are the main things that greatly impact your probability of success. When we are beginner traders, we have a win rate number planted in our heads. We see a trading guru get a 60% or 70% win rate and that is what we think we should be getting. Trading gurus show us how they win eight out of 10 trades and make big profits. But even after following all the rules, we only manage to get a break-even or just above a break-even win rate. We think that we are just not good enough. The trading guru must have a secret strategy that makes him win eight out of 10 trades with a big reward risk ratio. So we keep switching our strategy and chasing that high win rate. But we still never manage to get win rates like those trading gurus. But if we look at the data, you will see the reality of trading gurus and how they actually trade. This chart shows the win rate data of 10,000 trades. On the x-axis, we see the win rate score a strategy has achieved and on the y-axis we see the number of strategies that achieved that particular win rate score. Basically, if you see a tall mountain near the left side of the chart, it means a lot of strategies got a really low win rate. But if you see a tall mountain on the right side, it means many strategies got a high win rate. The different colored mountains you are seeing represent different market conditions. The red one represents the extremely bad market win rate. The blue one represents the mostly good market win rate and the green mountain represents the extremely good market win rate. In my testing series, I used a 1.5 to 1 reward to risk ratio. The break-even win rate for this ratio is 40%, which is represented by a win rate score of four on this chart. Basically, this yellow line is the break-even point. All strategies below that point made a loss and all strategies on the right-hand side of that point made a profit. As you can see in the extremely bad market, not only did most strategies make a loss, but the median point, which is represented by this red line, is also below the yellow break-even point. But you can also see that some part of this red
00:17
Speaker A
Trading Rush channel. I didn't just test them in one market, but in multiple market conditions from good to bad. In total, we tested more than 10,000 trades. That is a lot of trades. But I have also given all tested strategies a
00:33
Speaker A
trading score and rated them in different categories such as win rate, ease of use, reliability, consistency of profits, and quality of trades. All this helps us find the best trading strategy out there. But when I plotted this tested data using charts, I found
00:51
Speaker A
something really important and interesting. It showed the reality of trading and what actually decides if you will make it in trading or not. So in this video we will go through seven really important data points that will greatly impact your probability of
01:08
Speaker A
becoming a successful trader according to data. If you have been trading for a while there is a good chance you have tried many strategies and there is an even better chance that most of them did not work. So you ditched them, found new
01:25
Speaker A
ones and the cycle kept going. In our trading journey, we experienced that the majority of trading strategies don't work. Some of them give around a break even win rate and only a tiny percentage actually make money. But here is what
01:39
Speaker A
the data from over 10,000 trades actually shows. And it is going to change everything you knew about why strategies work. You see, on the Trading Rush channel, I tested strategies in mostly good, extremely good, and extremely bad market conditions. And
01:56
Speaker A
almost all strategies were trend trading strategies. Here, the first chart shows what happened to strategies in the mostly good trending market. This is the market where the price is mostly trending with bigger pullbacks, but also has range choppiness in between. In this
02:12
Speaker A
market condition, around 78% of strategies made a profit. only 13% actually lost money and around 9% was sitting near the break even point. This data proves something really important.
02:26
Speaker A
Take any strategy you have ever used, the ones you deleted, the ones you gave up on, and the ones we all thought didn't work. If those strategies were trend trading strategies, there is a really high chance the strategy was
02:40
Speaker A
working and making money all along. The strategy was never broken, but something else was the problem, which you will see in a moment. The second chart shows what happened to the strategies in extremely good market conditions. This is where
02:54
Speaker A
the price was moving strongly in one direction and the range choppy markets were filtered out. Around 87% of strategies made a profit and only 12% lost money. This also includes strategies that didn't give enough trading opportunities. But even counting
03:11
Speaker A
those as bad results, only 12% lost. Most of them made a really nice profit.
03:17
Speaker A
But things get really interesting in the extremely bad market conditions. Around 75% of strategies lost money and 23% were around the break even point. Only a single strategy out of everything managed to make a good profit. This is
03:34
Speaker A
important to understand because it really shows what is actually happening. For example, imagine you are standing at a train station. When the train slows down and stops, some people get out of the train and some people get in. Then
03:48
Speaker A
the train starts moving again, picks up speed, and before you know it, it is flying down the tracks. Now, at that point, it doesn't matter what is inside that train. Luggage, a bicycle, a confused tourist, or a broken umbrella.
04:05
Speaker A
Everything inside is moving at full speed. Not because of any special ability, but simply because the train is carrying it forward. But now imagine that this station is the last stop on the route. The train slows down. Some
04:19
Speaker A
people get out and some people get in. But this time, nothing happens. Everything and everyone who got on the train is now just sitting in a stationary train going absolutely nowhere. The 10,000 trades tested data is showing the same thing. A trending
04:37
Speaker A
market is like a moving train. The price moves in one direction, then slows down a little at the train station where people get in and out, and then the price continues to move in the trend direction. Strategies work not because
04:50
Speaker A
they are special, but because the trend is doing all the heavy lifting. When the price train comes to the last station and stops moving, becoming choppy, slow, ranging, or pretty much flat, most trend trading strategies in this market will
05:05
Speaker A
simply lose money. They lose not because they don't work, but simply because the train itself has stopped moving. That is why the data shows most strategies winning in good trending markets and most strategies losing money in bad market conditions. But the thing is when
05:22
Speaker A
we are beginner traders, we have no experience identifying the good and bad market conditions. Everything looks the same to us. Our trading experience looks something like the third chart where most trading strategies lose money and we think they simply don't work. This is
05:39
Speaker A
also the point where many traders simply quit trading. But once we gain enough live trading experience to identify the good and bad markets, we learn to simply avoid trading when market conditions get bad. As a result, the profit graph
05:54
Speaker A
starts moving in an upward direction overall. This is when we start finding strategies that actually work. But it was all an illusion. All these strategies always used to work. It just didn't work before because we lacked enough experience to filter out the bad
06:11
Speaker A
market conditions. So, the data from more than 10,000 tested trades says that if you really want to become profitable in trading, don't focus on the strategies. Focus on identifying the good and bad market conditions first because those are the main things that
06:27
Speaker A
greatly impact your probability of success. When we are beginner traders, we have a win rate number planted in our heads. We see a trading guru get a 60% or 70% win rate and that is what we think we should
06:43
Speaker A
be getting. Trading gurus show us how they win eight out of 10 trades and make big profits. But even after following all the rules, we only manage to get a break even or just above a break even win rate. We think that we are just not
06:58
Speaker A
good enough. The trading guru must have a secret strategy that makes him win eight out of 10 trades with a big reward risk ratio. So we keep switching our strategy and chasing that high win rate.
07:11
Speaker A
But we still never manage to get win rates like those trading gurus. But if we look at the data, you will see the reality of trading gurus and how they actually trade. This chart shows the win rate data of 10,000 trades. On the
07:26
Speaker A
x-axis, we see the win rate score a strategy has achieved and on the y-axis we see the number of strategies that achieved that particular win rate score.
07:36
Speaker A
Basically, if you see a tall mountain near the left side of the chart, it means a lot of strategies got a really low win rate. But if you see a tall mountain on the right side, it means many strategies got a high win rate. The
07:50
Speaker A
different colored mountains you are seeing represent different market conditions. The red one represents the extremely bad market win rate. The blue one represents the mostly good market win rate and the green mountain represents the extremely good market win
08:05
Speaker A
rate. In my testing series, I used a 1.5 to1 reward to risk ratio. The break even win rate for this ratio is 40% which is represented by a win rate score of four on this chart. Basically, this yellow
08:20
Speaker A
line is the break even point. All strategies below that point made a loss and all strategies on the right hand side of that point made a profit. As you can see in the extremely bad market, not only did most strategies make a loss,
08:35
Speaker A
but the median point which is represented by this red line is also below the yellow break even point. But you can also see that some part of this red mountain is on the right side of the yellow line. It basically means that
08:49
Speaker A
even though there were a few strategies that managed to make a profit even in an extremely bad market, the median line shows that the true middle point of all this data is on the losing side. It means that although there may be profit
09:02
Speaker A
in the short term, there is a high chance that the long-term profit in an extremely bad market will be negative.
09:09
Speaker A
The win rate will drop below the break even point. But then if you look at the green mountain which shows the extremely good trending market you will see that its median point is far away from the yellow break even win rate. The thing is
09:24
Speaker A
this median point could have been even higher as there were some strategies that achieved a really high win rate.
09:30
Speaker A
However, if you notice, the x-axis shows the win rate score and not the actual win rate because in an extremely good market, some breakoutlike strategies managed to get a really high unrealistic win rate. They achieved this by spamming
09:46
Speaker A
trades back to back or by getting lucky. So, their win rate score had to be reduced. Since this win rate category in the trading rush score accounts for spammy and lucky trades, this win rate data becomes more reliable than looking
10:00
Speaker A
at the spammy win rates. In fact, after filtering the lucky ones out, the data is saying that most trading strategies in an extremely good trending market will get a win rate that is around the 60% mark with a 1.5:1 reward to risk
10:16
Speaker A
ratio. Remember that the break even win rate with this ratio is 40%. So this 60% median is 20 points above the break even win rate which is actually a good thing for us. But if you pay attention to the blue mountain which
10:32
Speaker A
represents the mostly good trending market you will notice that its median line is only slightly above the break even point. In fact it is only 5% above the break even point. This proves two very important things. The first is that
10:47
Speaker A
if you see a random trading guru claiming to win eight out of 10 trades in a row consistently or get a really high win rate with a high reward to risk ratio, remember that he is most likely lying and showing you a hand-picked
11:00
Speaker A
setup. The data from more than 10,000 trades says that most people can realistically only achieve a profitable win rate that is 5 to 10% point higher than the break even win rate. Basically, if you find a strategy that is making
11:16
Speaker A
money, but only has a 5% to 10% point higher win rate than the break even, do not throw that strategy away in hopes of finding some unrealistic strategy that you saw a trading guru use. The second thing this data proves is that trading
11:32
Speaker A
in the right market conditions is really important if we want to make good money in trading. For example, you can see how far away the green mountain is from the break even point and even so far ahead of the blue mountain. But the thing is
11:46
Speaker A
extremely bad market conditions like ranging slow choppy are more frequent. So the majority of good traders will end up taking trades in mostly good markets which is made up of little bit of bad in between. Taking trades only in the
12:02
Speaker A
extremely good market is really rare and one has to be really good at trading.
12:07
Speaker A
But imagine having enough trading experience to filter out the extremely bad markets as much as possible. So you only end up trading in these two good market conditions. Imagine what that trading style would look like. I would say that kind of trader for the majority
12:22
Speaker A
of the time would do nothing and patiently wait for the right trading opportunity. That is exactly why it is said that patience in trading is one of the most important things. Patience and enough experience to avoid bad market
12:37
Speaker A
conditions are what will make you really profitable in trading. According to the data, at some point in our trading journey, we find someone who is trading on charts that look like this. There are many indicators on the chart and they are
12:53
Speaker A
confirming 10 different things. Sometimes the idea makes sense. If an indicator has a disadvantage, then using another indicator to fix it sounds like a good idea. I am sure we all do this at some point. But all we do is end up
13:08
Speaker A
creating a messy looking chart. Instead of finding good trades, we just end up finding confusion. So the question is, does adding more indicators to the chart or using a really difficult confusing strategy actually increase the win rate?
13:25
Speaker A
This is what the 10,000 trades data says on this chart. The x-axis shows how easy a strategy was to use and the yaxis shows the number of strategies at that easy to use level. Basically strategies on the left hand side were difficult and
13:41
Speaker A
confusing and the ones on the right were easy to use. The tall mountain near the right hand side shows that the most popular strategies were simple and easy to follow. They were not extremely simple like some strategies, but simple
13:55
Speaker A
enough for all market conditions. We only see one mountain this time because the other mountains are overlapping each other. However, there were also some strategies that were messy. They had too many rules or required multiple indicators to filter things. To see if
14:12
Speaker A
these difficult strategies actually increase the win rate or not, we will compare this easy to use data with the win rate data. This is what it looks like in this chart. The x-axis shows the win rate score and the y-axis shows how
14:26
Speaker A
easy the strategy was to use. Basically, if a strategy was difficult but got a higher win rate, it would appear in the right bottom corner of this chart. If the strategy was difficult but still got a lower win rate, then it would appear
14:41
Speaker A
on the bottom left of the chart. But as you can see, the strategies are all over the place. Not only did the easytouse strategies get a high win rate, but the difficult ones also did. On the other hand, in other market conditions, not
14:56
Speaker A
only did the easyto use strategies get a lower win rate, but the difficult ones also did. So, the data says that adding multiple indicators to the chart or using confusing and messy strategies with too many rules is probably not
15:11
Speaker A
going to increase your win rate. The biggest thing that will impact your win rate is the market condition itself.
15:18
Speaker A
Think of it like this. There are two cars. One is a basic reliable sedan with no fancy features and the other one is loaded with every fancy gadget available. It has a heads-up display, automatic lane correction, and autopilot
15:34
Speaker A
with 3D sensors everywhere, and 100 different cameras. It has a big screen for every possible feature. Now, imagine both cars are driving on a road that is full of potholes. When they drive, the fancy gadget car has no ability to fix
15:50
Speaker A
the potholes. The road is still the road. The extra complexity of the second car does absolutely nothing to solve the actual problem which is the condition of the road. Here the fancy car and the simple sedan will experience the same
16:06
Speaker A
outcome and the same success rate in crossing the road. In trading the market conditions are the road. If the market conditions are bad, it's better to slow down. It's better to take fewer trades with lower risk or simply avoid trading
16:20
Speaker A
in the garbage market conditions. The best move is to adapt to the market and find a different route to success. But if the market conditions are good and the road looks smooth, then it's better to increase our speed by taking as many
16:34
Speaker A
trades as possible in these good market conditions. That's why it is said that adapting to the market is one of the most important skills you can have in your trading journey.
16:47
Speaker A
Imagine you have two friends. One of them talks a lot and gives a lot of advice throughout the day. Some of his recommendations are right, but most of them are bad. Then there is the other friend who talks less. But when he opens
17:00
Speaker A
his mouth, his advice is more accurate. One of these friends is worth listening to more than the other when it comes to advice. One of them is simply more reliable than the other. Trading strategies are like these two friends.
17:14
Speaker A
Some give many entry points and end up winning in the short term on a particular chart or time frame. But at other times, even if the market conditions are the same, they become completely unreliable because they simply managed to win previously by
17:29
Speaker A
spamming. But then there are strategies that give fewer entry points. But when they talk, they are more reliable. It's like one friend is Warren Buffett and the other one is some random trading guru with 10 Ferraris in the background.
17:44
Speaker A
We all would definitely pay attention to what Mr. Buffett has to say. This is exactly what this reliability data is showing. The x-axis shows the reliability scores the strategies received and the y-axis shows how many strategies received those reliability
18:00
Speaker A
scores. Here, if you see a mountain on the left side, it means more strategies were unreliable. But if you see tall mountains on the right hand side, it means more strategies were reliable. But as you can see this time we see multiple
18:15
Speaker A
mountains even in the same market condition. The blue represents the mostly good market condition but this time it has two mountains. This happened because fewer strategies reliably gave entry points without spamming or getting lucky. If you use them in different
18:31
Speaker A
stocks, forex or crypto, the win rate will have a higher probability of staying similar as long as the market condition is also similar. But then there were some strategies that managed to make money this time. But if you try
18:45
Speaker A
them on different stocks, Forex or crypto, they can give a different win rate even if the market condition is mostly good and trending. That is because those strategies gave entries in a spammy way like talking too much and
18:59
Speaker A
one by getting lucky this time. You can see a similar pattern in the extremely good market conditions as well. Since some strategies got a high win rate by spamming trades, they received a lower score in the reliability category while
19:13
Speaker A
others got a higher score. That is why we see two mountains. But in the extremely bad market, almost all strategies sucked and so they received a lower score except for one strategy.
19:27
Speaker A
This one managed to make a good enough profit without spamming trades and received a higher reliability score, but that is rare. The tall red mountain and its median line are far away from this more reliable strategy. But the data is
19:42
Speaker A
basically saying that although you will find working, profitable strategies, some talk more and might look good in the short term. However, fewer strategies are actually reliable across different charts and time frames, even if the market conditions are the same.
20:01
Speaker A
Making money in trading and making money consistently in trading are two completely different things. A strategy can be profitable overall, but can be an absolute nightmare to actually trade.
20:14
Speaker A
Imagine a profit graph that spends a long time going sideways or down, but then spikes upward and finishes in positive territory. Technically, that strategy made a profit, but not consistently. The person trading it would have simply quit before seeing any
20:30
Speaker A
profit. The final spike could have also been just luck. On the other hand, a consistently upward moving profit graph is much better, and most traders would prefer this. That's exactly what the consistency of profit data is measuring.
20:44
Speaker A
It's not just whether a strategy made profits, but how consistently the profit graph moved up. The x-axis shows the consistency of profit score a strategy got and the yaxis shows how many strategies got that consistency score.
21:00
Speaker A
Basically, if you see tall mountains on the left hand side, it means more strategies made their profits inconsistently.
21:07
Speaker A
And if you see tall mountains on the right hand side, it means more strategies made their profits consistently. We don't want our profit graph to move up and down like a roller coaster. We want it to move up more
21:19
Speaker A
consistently. But as you can see, all market conditions are showing completely different consistency data. Here the blue mostly good market data is showing mountains all over the place. The profit graphs of some strategies moved in the upward direction more consistently. But
21:36
Speaker A
there were many strategies where the graph was slow, mostly flat or moving in the downward direction. On the other hand, in an extremely good market, almost all strategies made money really consistently. The only ones that got a lower score were the ones that didn't
21:53
Speaker A
give enough entry points. But in extremely bad market conditions, except for one strategy, all other strategies consistently made a loss. Their profit graphs were consistently moving in a downward direction or were flat. All this consistency of profit data is
22:10
Speaker A
showing us that in a mostly good trending market, we should expect our profit graph to become flat in the short term, even if the strategy is profitable in the long term. If we want really consistent and big profits, then we
22:23
Speaker A
should aim to take as many trades in the extremely good market as possible. But most importantly, the data says that the strategy doesn't really decide your profit consistency. The market condition does.
22:38
Speaker A
Every strategy gives an entry point with its own logic in a trend. Some strategies try to give an entry point near the end of a pullback, like when the price starts moving back in the trend direction, but some strategies
22:51
Speaker A
give an entry point at every small reversal, like at every attempt of the price moving back in the trend direction. In certain market conditions, this can lead to multiple back-to-back losses before finally winning a trade.
23:05
Speaker A
Here it is much better to use a strategy that uses a slow reacting logic and only gives an entry point with a higher probability of winning. Basically, some strategies give entries that do not really make sense in those market
23:19
Speaker A
conditions. They kind of look random, but some strategies are more logical. That is exactly what the quality of trades data is measuring. The x-axis shows the quality score a strategy received and the y-axis shows the number of strategies that received that quality
23:36
Speaker A
score. In extremely bad markets when the price is choppy and messy, taking trades with most strategies doesn't really make sense. Here the quality of those trades was much lower except for one strategy.
23:50
Speaker A
We will get to that strategy in the next chapter. But the interesting thing is that in the mostly trending market, you can once again see two mountains. This is because even though there were profitable strategies, many of them gave
24:04
Speaker A
a lower quality setup. It's similar to getting an entry point at every small reversal. On the other hand, fewer strategies gave higher quality entries, like one proper entry at the end of the pullback. But things get even more
24:18
Speaker A
interesting. The same strategies that had a lower quality score in the mostly good market became better strategies in the extremely good market. That is because in the extremely good market when the price is in a really strong trend, the pullbacks are often much
24:35
Speaker A
smaller. The price moves in the opposite direction a little bit and then quickly returns to the trend direction. here.
24:43
Speaker A
Quick reacting strategies that were bad before in the mostly good market actually performed better and achieved a higher win rate. Not only that, but the strategies that performed really well during bigger pullbacks in the mostly good market can give a relatively low
24:59
Speaker A
win rate in the extremely good market simply because there are not enough bigger pullbacks. The number of trading opportunities can also drop as a result.
25:10
Speaker A
So the data from more than 10,000 trades shows us that the logic that makes a strategy work in one market condition can fail in a better market condition and vice versa. So instead of only using one best trading strategy, we should
25:26
Speaker A
have multiple strategies for different market conditions. When we want to take a trade, we first analyze what kind of market it is. Then we simply use the strategy that works in that market condition. On the other hand, if we only
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Speaker A
use one strategy, we might fail in the long run. Speaking of failures, do you know how in extremely bad market conditions, one strategy achieved a good win rate and made some nice profits while the rest of them sucked? That strategy was the
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Speaker A
weighted moving average crossover strategy. We buy when the 50 period weighted moving average crosses above the 200 period weighted average. The stop loss goes below the crossover and the profit target is 1.5 times the stop-loss distance. One of the reasons
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Speaker A
it made profits is that it didn't spam trades like some other strategies. But this strategy can't be completely foolproof, right? Even though it made good profits in extremely good markets, in mostly trending markets, and even in extremely bad markets, it has to lose
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Speaker A
somewhere, right? There has to be some weakness where it would fail, right? To find out, I wrote some code this time and tested many trades with this weighted moving average strategy in different charts and time frames. And this is what I found. Number one, in
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Speaker A
extremely good to trending markets, this strategy gave a win rate of around 60% with a 1.5:1 reward risk ratio. Remember that the break even win rate for this ratio is 40%. So this win rate of around 60% is really high. Number two, in
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Speaker A
extremely strong uptrending markets, if you take both long and short trades with this strategy, then the win rate drops significantly. It dropped from around 60% to only 45%.
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Speaker A
In some scenarios, it even dropped below 40%. That makes sense because if there is a strong uptrend going on and you take both long and short trades, the long trades will have a really high win rate and the short trades will suck
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Speaker A
completely. So overall, your win rate will drop. For example, in the same extremely strong uptrend when I only took short trades, the win rate dropped to around 30%.
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Speaker A
Number three, in a mostly trending market that also had a decent amount of range and slow movement in between. When I only took long trades with this strategy, I got around a 46 to 47% win rate. The interesting thing is that when
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Speaker A
I flipped the direction and only took short trades in this mostly trending and slow market, I still got around a 47% win rate. Then when I took both long and short trades in the mostly trending and slow market, I still got around a 47%
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Speaker A
win rate. But in a narrow range where the price was not making wider swings, the moving averages were too slow to react and change direction. Because of that, they end up giving crossovers when the price is about to reverse back. In
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Speaker A
these narrow range market conditions, I got a wide range of win rates from 30% to around 40%.
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Speaker A
But most win rates stayed on the lower side. Basically, when there is a narrow range occurring, this moving average crossover strategy completely sucks. On the other hand, in wider ranges like this with big swings, it performed better. But when I didn't account for
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Speaker A
any trend or range, I got a random win rate that was ranging anywhere from around 30 to 45%.
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Speaker A
Basically, this weighted moving average crossover strategy worked when the market was extremely trending, mostly trending, slowly trending, or in a wide range. It doesn't work when the range is too narrow or extremely flat. It sucks when you take trades against the trend
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Speaker A
and it gives a random win rate if we don't account for market conditions and trade randomly. But one thing is clear in all the tests we have done in different market conditions. In the more than 10,000 trades of data we have seen,
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Speaker A
the thing that had the biggest impact on the win rate, reliability, quality of trades, and consistency of profits was the market condition itself. Since the data says around 75 to 80% of strategies make money in trending markets, we
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Speaker A
really shouldn't focus on finding the best strategy. Instead, if we really want to succeed in trading, we should focus on getting better at identifying good and bad market conditions because that skill alone can make you a profitable trader. If you have a perfect
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Speaker A
strategy, it can still lose money if you don't know when not to trade. But if we are good at identifying different market conditions, we can make good profits in the long run even with an average strategy because we can simply adapt our
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Speaker A
strategy and rules when the market conditions change. Even in my own trading journey, learning when not to trade is one of the main things that has helped me survive for 9 to 10 years now.
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Speaker A
To see how I made 100% profit in a year and to see live trade setups that made profits in the live market in the long run, support Trading Rush on Patreon.
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Speaker A
It's basically my current strategies applied in the live market and proof of if they work or not. The link is in the description. Thanks for watching.
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Speaker A
[music]
Topics:trading strategiestrend tradingmarket conditionswin ratetrading successtrading data analysisprofitability in tradingrisk managementtrading psychologyTrading Rush

Answers

Frequently Asked Questions

Why do most trading strategies fail according to the video?

Most strategies fail not because they are inherently bad, but because they are applied in bad market conditions where the price is choppy or flat, causing trend strategies to lose money.

What is the main factor that determines if a trading strategy will be profitable?

The main factor is the market condition—strategies perform well in trending markets but poorly in sideways or bad market conditions.

How can beginner traders improve their chances of success?

Beginner traders should focus on learning to identify good and bad market conditions and avoid trading during bad conditions, rather than constantly switching strategies.

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